Asciano in coal haulage deal with Whitehaven

Asciano will haul 11.5 million tonnes annually for Whitehaven once axle loads are raised, up from current haulage rates of 9.5 million tonnes annually.
Photo: Glenn Campbell

by
Jenny Wiggins

Asciano’s
Pacific National rail group has struck a deal with Australia’s second biggest independent coal producer,
Whitehaven
, to carry heavier loads as miners cut costs.

“Coal producers are out there looking to take their unit cost of production down by moving as much coal as they possibly can," Pacific National Coal’s director,
David Irwin
, told The Australian Financial Review.

Whitehaven Coal, which has been a customer of Pacific National in NSW’s Gunnedah Basin for more than a decade, initiated the discussions over a new haulage agreement with the rail operator as it tries to become more efficient.

Rail track infrastructure in the Gunnedah Basin was initially developed for trains carrying lighter loads of grain, and is only designed to carry axle weight of 25 tonnes. “It was built as a grain network, it was never envisaged 50 years ago to be hauling significant tonnes of coal," Mr Irwin said.

Track infrastructure in other parts of the Hunter Valley is designed to carry heavier loads of 30 tonnes, while railways in Western Australia’s Pilbara region can carry up to 40 tonne loads.

However, the Gunnedah rail tracks have been upgraded over the past decade, and will be able to carry 30 tonne loads from 2015. Pacific National says the rise in load capacity will let it haul 11.5 million tonnes of coal yearly for Whitehaven, up from 9.5 million tonnes annually. The increase in loads will let Pacific National carry more coal on fewer trains, reducing costs.

Over the past five years, Pacific National has been buying trains capable of carrying 30 tonne loads in preparation for the increase in capacity.

The new haulage agreement with Whitehaven, which starts this month and expires in June 2026, enables Pacific National to replace its two existing 20-year old trains which can only carry loads of 25 tonnes.

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The agreement comes as Pacific National’s rival,
Aurizon
, expands in the Gunnedah basin this year after securing a deal with Whitehaven to haul up to 16 million tonnes of coal annually to the Port of Newcastle from four sites, including the new Maules Creek project, which is in the final stages of its approval process. Maules Creek, one of the largest coal deposits in Australia. is expected to start producing coal in the first quarter of 2015.

Aurizon has also been working with Whitehaven and Australian Rail Track Corporation (ARTC) to increase axle loads and is building a new $110 maintenance facility at Hexham, near Newcastle. The Hexham facility will help improve the efficiency of all trains operating in the Hunter Valley, Mr Irwin said, adding he remained confident on the outlook for coal exports.

“We’re very clear that the amount of coal exported out of Australia is going to increase over time and it will probably increase every year, year on year."

A record 150.5 million tonnes of coal was exported from Newcastle in 2013, with the port shipping almost 17 million tonnes more than in 2012.

The annual growth rate of 12.5 per cent is the fourth consecutive year of annual growth above 10 per cent for coal exports from Newcastle, according to the NSW government which is privatising the port.

The state government has struck a deal with Port Waratah Coal Services and the Newcastle Coal Infrastructure Group, which own the port’s export terminals, to expand the port’s coal export capacity.

The agreement comes amid expectations exports could rise to as much as 270 million tonnes annually by 2025, due to rising demand from China and India. Under the deal, known as the Hunter Coal Export Framework, terminals will be expanded and a new terminal built on Kooragang Island.

This will increase Newcastle’s export capacity to 211 million tonnes annually by 2015. The sale of the port, expected to reap between $700 million and $1 billion for the government, is expected to be completed by April.